- 3 Big Scoops
- Posts
- S&P 500 at Record High
Bulls, Bitcoin, & Beyond
Market Moves Yesterday
S&P 500 @ 4,958.61 (⬆️ 1.07%)
Nasdaq Composite @ 15,628.95 ( ⬆️ 1.74%)
Bitcoin @ $42,475.60 ( ⬇️ 0.41%)
Hey Scoopers,
Rise and shine - it’s Monday 🌞. Let’s start your week with the latest financial buzz. Here are our highlights today.
👉 Tech stocks continue to rally
👉 Is doom spending a problem?
👉 Binance aims to re-enter UK
So, let’s go 🚀
S&P 500 Index Is Up 4.5% YTD
The flagship S&P 500 index surged to a record high on Friday, its 7th for the year. The index, which tracks the 500 largest companies in the world, is up 4.55% in 2024 and 20.6% in the last 12 months.
Tech stocks such as Meta, Microsoft, and Nvidia are all trading at new all-time highs. In fact, the Magnificient 7 have added a combined $3 trillion in market cap in 2024.
Meta added a whopping $200 billion in market cap in a single trading session- the biggest one-day for any publicly listed company in history! The social media giant also announced a quarterly dividend of $0.50 per share, a move cheered by Wall Street.
Microsoft is the largest publicly traded company in the world, valued at $3.05 trillion by market cap. The tech giant is now larger than the entire value of Canada’s biggest stock exchange.
S&P 500 companies deliver record profits
Despite challenging macro conditions, rising interest rates, and inflation, companies that are part of the S&P 500 index have surprised investors with resilient earnings in Q4 of 2023.
The fourth quarter is shaping up to be the best of 2023 on the back of easing input costs, emphasis on operational efficiencies, and conservative consensus estimates.
According to Refintiv, S&P 500 earnings in Q4 are forecast to grow by 8%, much higher than estimates of 4.7% three weeks back.
The sectors that have delivered better-than-expected results in Q4 include:
👉 Energy - 90% of companies have beaten estimates, with profits 14% above expectations
👉 Healthcare- 85% of companies have beaten estimates, with earnings beating forecasts by 11%
👉 Technology- 84% of companies have beaten estimates, with earnings beating expectations by 5%
Around 80% of S&P 500 companies have beaten estimates in Q4, higher than historical trends. Moreover, earnings have surpassed estimates by 6% in the December quarter.
While Q4 results have been solid, the momentum might be short-lived. For instance, earnings estimates for both Q1 and the full-year 2024 have declined in the last month due to a cautious outlook from companies this earnings season.
Americans Are Doom Spending
Consumer spending has remained strong in the face of multiple economic headwinds.
Around 96% of Americans are concerned about the state of the economy, according to a report from Credit Karma. However, about 25% of Americans are “doom spending,” or spending money on luxury items, even though they wrestle with the prospect of an economic downturn.
Source: CNBC
Despite the rising cost of debt and inflation, 200 million shoppers turned up between Black Friday and Cyber Monday, according to the National Retail Federation.
Moreover, NRF expects holiday spending to touch record levels of $966.6 billion in 2023, even as credit card debt topped $1 trillion last year.
But is this a high-risk spending trend that might hurt individuals and households over time?
Instead of cutting expenses, 73% of Gen Z respondents stated they would live in the moment and enjoy life. Around 53% said the cost of living is a barrier to financial success and are discouraged from saving.
While you should allocate savings towards leisure, saving at least 10% of your pre-tax income is crucial once you reach the age of 30 to benefit from the power of compounding.
Binance Aims to Enter the UK Again
Binance, the world’s largest cryptocurrency exchange, is facing obstacles as it aims to re-establish its presence in the United Kingdom.
According to a report from Milk Road:
Binance is seeking UK partners for communications under new crypto rules; at least 3 have declined.
Rejections come after UK regulator FCA privately discouraged prospects from working with Binance.
It follows years of FCA warnings over Binance’s compliance standards and opaque structure.
Last year, Binance founder Changpend Zhao was forced to resign from the helm and paid $4.3 billion in settlement charges to regulatory agencies.
The FCA remains skeptical of Binance’s opaque structure and checkered history as it attempts to enter the UK once again. Binance was previously banned by the UK in 2021.
Headlines You Can’t Miss!
The Fed will remain cautious on rate cuts
Gold prices to hit $2,200, says UBS
New quality glitch to delay Boeing 737 Max deliveries
Satya Nadella completes ten years with Microsoft
Genesis requests sale of GBTC shares worth $1.4 billion
Chart of The Day
US employment data showed that the job market stayed firm in January, a release that will dominate the Federal Reserve’s (the Fed) decision-making.
What does this mean?
Believe it or not, many economics enthusiasts compromise precious hours of their Friday and Saturday to run through nonfarm payroll figures – and if you’re reading this, you're included.
In fairness, though, this one was worth missing the first pint at the pub for. The US filled 353,000 jobs in January, and with companies competing for top talent, they pushed the average wage up a more-than-expected 4.5% over the month.
Good news: that means more money in Americans’ pockets. Bad news: that means they can keep up with higher prices, potentially stoking inflation just when it seems to be calming down.
The Fed has plainly said not to expect an interest rate cut anytime soon. However, investors seem to think they know better, sticking to their predictions of six interest rate cuts this year.
But they might want to heed the warning: interest rates are still wearing down inflation, and with the economy and job market holding up, there’s no reason for the Fed to rush to grab the scissors.
The bigger picture
S&P 500 businesses managed to make 1% more profit last year than the one before. That’s a small but mighty feat in this economy, not least because interest rates have made it more expensive for companies to invest in themselves.
What’s more, analysts are now expecting US firms to bring up profit by another 12% this year, a performance that would prove the country’s companies are tougher than steel—or at least interest rate hikes.
DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell assets or make financial decisions. Please be careful and do your own research.